‘People will have to lose their jobs’ and other economic consequences
The coronavirus pandemic has infected over 125,000 people worldwide, leaving the global markets in a panic.
“We’ll start to see the supply disruptions, not only from the international supply chains, but also from domestic movement of goods and services,” said Professor Dean Jamison, Professor Emeritus at University of California at San Francisco. “People will have to lose their jobs, because they don’t have the materials to work with.”
Adilisha Patrom checks her stock of face masks in her coronavirus pop-up store in Washington, DC, on March 6, 2020. (Photo: NICHOLAS KAMM / AFP) (Photo by NICHOLAS KAMM/AFP via Getty Images)
Airlines have suspended flights. Cruise companies have seen their bookings plummet. The price of oil dropped as much as 34 percent – also in part to a trade war between Saudi Arabia and Russia. Wall Street lived through its worst day in over a decade. Even massive multinational tech companies like Apple, Google, Facebook, Amazon, and Microsoft are expecting to miss their revenue targets or have already seen their stocks take a dive as they continue to witness a halt in production.
“The longer it goes on and the more kind of sustained transmission we see, the more likely it is to people will adopt a kind of conservative position and try to limit their risk in ways that will introduce economic drag,” Ben Oppenheim, senior director and senior scientist at Metabiota, told Yahoo Finance. “That’s got to be on the minds of anyone running a business that requires public confidence to operate. That will certainly weigh on the minds of the markets as well.”
Coronavirus around the world. (Graphic: David Foster/Yahoo Finance)
COVID-19 already upended supply chains. Most factories in China haven’t been operating at a hundred percent capacity since lunar new year with workers being sent home to tend to themselves and so that Chinese authorities can attempt to blunt the spread of the virus.
“It really is anything that has a physical manufacturing footprint within China is going to be impacted by this,” Yahoo Finance Tech Editor Daniel Howley said.
Major American companies like Apple and Microsoft acknowledged they do not have the capability to finish getting all of their products done to put them on the market. Apple, for instance, sold 494,000 iPhones in China amid the outbreak in February. In the same month in 2019, Apple sold 1.27 million of its smart phones in China.
The American healthcare system is already notorious for its high costs and irritating wait times.
Coronavirus could create further obstacles for filling prescriptions in America. China supplies the U.S. with raw materials that help produce roughly 370 drugs, and about 15% of the global drug manufacturing plants are located in China. The FDA already confirmed that one drug manufacturer notified it of a drug shortage as a result of the Coronavirus’s impact in China, though they did not reveal the name of the drug.
“Clearly, the economics and the evolution of the disease itself, how severe that evolution is, are intimately linked,” Jamison noted. “A best case scenario is a few hundred dead in the United States, and the economic consequence is real because of fear, but short lived. So maybe a quarter percent, a half percent of GDP over a year from a best case scenario or a good case scenario.”